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Discontinued Operations | 12 Months Ended
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Dec. 31, 2021
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations |
1 9. | Discontinued Operations
Barnett Shale On December 17, 2019, Devon announced that it had entered into an agreement to sell its Barnett Shale assets to BKV. Devon concluded that the transaction was a strategic shift and met the requirements of assets held for sale and discontinued operations upon the authorization to enter the agreement by Devon’s Board of Directors. As part of its assessment, Devon effectively exited its last natural gas focused asset and the transaction resulted in a material reduction to total assets, revenues, net earnings and total proved reserves. Estimated proved reserves associated with Devon’s Barnett Shale assets were approximately 45% of the total proved reserves. As a result, Devon classified the results of operations and cash flows related to its Barnett Shale assets as discontinued operations on its consolidated financial statements. In conjunction with the divestiture agreement, which was amended in April 2020, Devon recognized a $182 million and $748 million asset impairment related to the Barnett Shale assets in 2020 and 2019, respectively, primarily due to the difference between the net carrying value and the purchase price, net of estimated customary purchase price adjustments, which qualifies as a level 2 fair value measurement. Approximately $88 million of the U.S. reporting unit goodwill was allocated to the Barnett Shale assets. Additionally, Devon ceased depreciation for all plant, property and equipment classified as assets held for sale on the date the sales agreement was approved by the Board of Directors. On October 1, 2020, Devon completed the sale of its Barnett Shale assets to BKV for proceeds, net of purchase price adjustments, of $490 million. Additionally, the agreement provides for contingent earnout payments to Devon of up to $260 million based upon future commodity prices, with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commenced on January 1, 2021 and has a term of four years. Devon received $65 million in contingent earnout payments related to this transaction in the first quarter of 2022 and could receive up to an additional $195 million in contingent earnout payments for the remaining performance periods depending on future commodity prices. The valuation of the future contingent earnout payments included within other current assets and other long-term assets in the December 31, 2021 balance sheet was $65 million and $111 million, respectively. During 2021, Devon recorded a $110 million increase to the fair value within asset dispositions on the consolidated statements of comprehensive earnings related to these payments. These values were derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement. Canada In the second quarter of 2019, Devon completed the sale of its Canadian business for $2.6 billion ($3.4 billion Canadian dollars), net of purchase price adjustments, and recognized a pre-tax gain of $223 million ($425 million net of tax, primarily due to a significant deferred tax benefit) in 2019. Current (cash) income and withholding taxes associated with the Canadian business were approximately $175 million and were paid in the first half of 2020. Devon concluded that the transaction was a strategic shift and met the requirements of assets held for sale and discontinued operations based upon the following: 1) Devon was exiting its entire heavy oil and Canadian operations; 2) Devon’s Canadian operations were a separate reportable segment and a component of Devon’s business; and 3) the transaction resulted in a material reduction in total assets, revenues, net earnings and total proved reserves. The disposition of substantially all of Devon’s Canadian oil and gas assets resulted in Devon releasing its historical cumulative foreign currency translation adjustment of $1.2 billion from accumulated other comprehensive earnings to be included within the gain computation. The historical cumulative foreign currency translation portion of the gain is not taxable. During the third quarter of 2019, Devon utilized a portion of the sales proceeds to early retire $500 million of the 4.00% senior notes due July 15, 2021 and $1.0 billion of the 3.25% senior notes due May 15, 2022. Devon recognized a charge on the early retirement of these notes consisting of $52 million in cash retirement costs and $6 million of noncash charges. The following table presents the amounts reported in the consolidated statements of comprehensive earnings as discontinued operations.
Year ended December 31, |  | Barnett Shale |  |  | Canada |  |  | Total |
2020 |  |  |  |  |  |  |  |  |  |  |  |
Oil, gas and NGL sales |  | $ | 263 |  |  | $ | — |  |  | $ | 263 |
Total revenues |  |  | 263 |  |  |  | — |  |  |  | 263 |
Production expenses |  |  | 214 |  |  |  | — |  |  |  | 214 |
Asset impairments |  |  | 182 |  |  |  | — |  |  |  | 182 |
Asset dispositions |  |  | (4 | ) |  |  | 5 |  |  |  | 1 |
General and administrative expenses |  |  | — |  |  |  | 3 |  |  |  | 3 |
Financing costs, net |  |  | — |  |  |  | (3 | ) |  |  | (3 | )
Restructuring and transaction costs |  |  | — |  |  |  | 9 |  |  |  | 9 |
Other expenses |  |  | 10 |  |  |  | (1 | ) |  |  | 9 |
Total expenses |  |  | 402 |  |  |  | 13 |  |  |  | 415 |
Loss from discontinued operations before income taxes |  |  | (139 | ) |  |  | (13 | ) |  |  | (152 | )
Income tax benefit |  |  | (11 | ) |  |  | (13 | ) |  |  | (24 | )
Loss from discontinued operations, net of tax |  | $ | (128 | ) |  | $ | — |  |  | $ | (128 | )
2019 |  |  |  |  |  |  |  |  |  |  |  |
Oil, gas and NGL sales |  | $ | 486 |  |  | $ | 741 |  |  | $ | 1,227 |
Oil, gas and NGL derivatives |  |  | — |  |  |  | (113 | ) |  |  | (113 | )
Marketing and midstream revenues |  |  | — |  |  |  | 38 |  |  |  | 38 |
Total revenues |  |  | 486 |  |  |  | 666 |  |  |  | 1,152 |
Production expenses |  |  | 306 |  |  |  | 293 |  |  |  | 599 |
Exploration expenses |  |  | — |  |  |  | 13 |  |  |  | 13 |
Marketing and midstream expenses |  |  | — |  |  |  | 18 |  |  |  | 18 |
Depreciation, depletion and amortization |  |  | 77 |  |  |  | 128 |  |  |  | 205 |
Asset impairments |  |  | 748 |  |  |  | 37 |  |  |  | 785 |
Asset dispositions |  |  | 1 |  |  |  | (223 | ) |  |  | (222 | )
General and administrative expenses |  |  | — |  |  |  | 34 |  |  |  | 34 |
Financing costs, net |  |  | — |  |  |  | 87 |  |  |  | 87 |
Restructuring and transaction costs |  |  | — |  |  |  | 248 |  |  |  | 248 |
Other expenses |  |  | 11 |  |  |  | 6 |  |  |  | 17 |
Total expenses |  |  | 1,143 |  |  |  | 641 |  |  |  | 1,784 |
Earnings (loss) from discontinued operations before income taxes |  |  | (657 | ) |  |  | 25 |  |  |  | (632 | )
Income tax benefit |  |  | (142 | ) |  |  | (216 | ) |  |  | (358 | )
Net earnings (loss) from discontinued operations, net of tax |  | $ | (515 | ) |  | $ | 241 |  |  | $ | (274 | )

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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